Kansai Nerolac - Q4FY21 First Cut - ICICI Direct

(CMP: Rs. 591 MCap: Rs. 31847 crore)

Kansai Nerolac reported a mixed bag numbers in Q4FY21 with topline coming in better than expected but margins & PAT a bit lower than expected.

Q4FY21 Earnings Summary

Kansai Nerolac's net revenue came in at ~Rs. 1330.5 crore up by ~35% YoY (ahead of our estimate of Rs. 1232.5 crore) led by high double digit volume growth in the both decorative and industrial paints segment. The strong revenue growth was also supported by low base of Q4FY20 which was impacted by lockdown

The gross margin declined by 409 bps YoY in Q4FY21 mainly due to delay in passing on of higher raw material cost. However, savings in employee cost and other cost by ~162 bps and 482 bps respectively helped drive overall EBITDA margin up by 235 bps YoY to 15.3% (Vs I-direct estimate 16.4%)

PAT increased by ~79% to Rs. 128 crore (Vs I-direct estimate: Rs. 135 crore), mainly tracking strong sales growth and EBITDA margin expansion. For FY21, company has declared total dividend of Rs. 5.3/share (A payout of 52%)

For FY21, Kansai's recovery seen at 95% supported by demand recovery during H2FY21. While annual gross margin profile remains intact, the EBITDA margin increase of ~200 bps YoY to 17.8% was on account of various cost optimisation measures taken by the company amid pandemic. We await management commentary on sustainability of future demand outlook of paints and price hikes to offset input prices pressure amid second wave of covid-19. The detailed report will be released post conference call.

Shares of KANSAI NEROLAC PAINTS LTD. was last trading in BSE at Rs.588.7 as compared to the previous close of Rs. 592.15. The total number of shares traded during the day was 11169 in over 527 trades.

The stock hit an intraday high of Rs. 599.75 and intraday low of 587.55. The net turnover during the day was Rs. 6605917.

Source : Equity Bulls

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